Weekly payments of $563.55
Annual compound interest of 5%
number of periods 1065.48

Strange I know. But I am having trouble matching up the interest with the number of periods when the interest compounds annually.:mad:

Dec 23rd 2006, 04:33 AM

Soroban

Hello, mtbrooks!

Can you provide the original problem?
As given, the problem makes no sense . . .

Quote:

I need to know the present value of this annuity due:

Weekly payments of $563.55
Annual compound interest of 5%
Number of periods 1065.48

Before any payments are made, the present value of any annuity is

Where did that number of periods come from?. .
Does any financial institution work to the nearest second?

Dec 23rd 2006, 05:41 AM

JakeD

Quote:

Originally Posted by mtbrooks

I need to know the present value of this annuity due:

Weekly payments of $563.55
Annual compound interest of 5%
number of periods 1065.48

Strange I know. But I am having trouble matching up the interest with the number of periods when the interest compounds annually.:mad:

Quote:

Originally Posted by Soroban

Hello, mtbrooks!

Can you provide the original problem?
As given, the problem makes no sense . . .

Before any payments are made, the present value of any annuity is

Perhaps it's not clear what "annuity due" means. An annuity due is an annuity where the payments are made at the beginning of the periods instead of at the end as in an ordinary annuity.

One way to treat this problem is to break it in two. There is one annuity due of 1065 payments for which the present value can be calculated by the usual formula. Then there is that one payment at the end. What is the amount? Is it .48 x 563.55? Whatever it is, calculate the present value of that amount and add it to the other present value to get the total.